New FCA rules will prevent corporate banks, corporate brokers and investment banks from including in their terms of engagement clauses which give them the right to provide future capital markets and M&A services to clients. Agreements made with clients on or after 3 January 2018 cannot include these clauses.


The FCA believes the ban will provide clients with greater choice of future service providers, as well as more competitive terms.

What is banned?

The ban will prevent firms from entering "future service restrictions" with their clients. A future service restriction is any provision in an agreement between a firm and a client which, in addition to the products or services to which the agreement relates, grants the firm or an affiliated company of the firm the right to:

  • provide any future primary market and M&A services to the client; or
  • provide those services to the client before the client can accept any offer from a third party.

Primary market and M&A services are:

  • services provided to an issuer comprising structuring, underwriting or placing an issue of shares, warrants, certificates representing securities or debentures; or
  • advice and services relating to mergers and the purchase or disposal of undertakings.

The ban would, for example, cover a clause in an IPO mandate granting a bank the right to provide future M&A services should the client need them in the next 24 months.

What is allowed?

The prohibition applies to unspecified and uncertain future services only, and will not prevent agreements for a specified or certain future service. 

It will also not prevent agreements that only give the firm the right or opportunity to:

  • pitch for future business or to be considered in good faith alongside other providers for future business; or
  • match quotations from other providers, but which do not prevent the client from selecting the other providers.

Agreements to provide bridging finance are also excluded from the ban, provided the future services restrictions only involve the firm providing services related to the bridging (e.g. replacing the bridging with a bond or equity issue).

Although the ban only covers written agreements, the FCA has warned against using oral agreements to avoid the prohibition.  

Who is affected?

The ban generally applies to agreements entered into by an FCA-authorised firm's UK establishment and its overseas branches, but not its unregulated subsidiaries or affiliates. The location of the client is irrelevant.

How should affected firms respond to the changes?

Firms should now be:

  • putting procedures in place to ensure agreements with clients entered on or after  3 January do not include the banned clauses;
  • if necessary, amending templates for contracts and engagement letters, and updating any guidance, policies and training; and
  • considering any risk and pricing strategies.

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